Southampton leads the way in UK rental yields

People across the UK who are looking to get themselves into the buy-to-let sector with an investment in rental homes are always seeking the best levels of income that they can discover to allow them a fantastic return on investment.

And now HSBC has released a list of those cities and towns around the UK where landlord insurance customers can get the highest amount of income, with some of them providing surprising results.

While many might expect London to provide the most effective investment, largely due to its high demand levels and a lack of supply of housing, the best area to put money into actually appears to be Southampton.

The Hampshire city is home to the highest yields in the nation, which average out at 7.82 per cent. Other cities that performed well in the country included the likes of Manchester, Hull and Nottingham.

According to the bank, the reason for this high return comes from the fact that the initial price in many of these areas is considerably lower than it is elsewhere, while demand remains high, which is allowing landlords to increase their rental charges to tenants.

Elsewhere, towns on the coast where holidaymakers bring large seasonal swells in the price of renting properties has seen the likes of Blackpool surge to the top of the charts again, with the Lancashire hotspot seeing a level of yield just below that of Southampton at 7.81 per cent.

Peter Dockar, head of mortgages at HSBC, said: "Buy to let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above five per cent, significantly more than is available from more traditional savings options.

"However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded so it is key landlords do their research as often the most popular locations may not offer the best return."